What is the Medicare Levy Surcharge?

The Medicare Levy Surcharge (MLS) is an additional tax of 1% to 1.5% of your taxable income, on top of the standard 2% Medicare levy. It applies to Australian taxpayers who earn above the MLS threshold and do not have an eligible private hospital insurance policy. The surcharge is designed to encourage higher-income earners to take out private health insurance and reduce demand on the public health system.

At what salary does private health become cheaper than MLS?

For singles, the MLS kicks in at $101,001. At that income level, the 1% surcharge is about $1,010 per year. Basic hospital cover policies that satisfy the MLS exemption start from around $900-$1,200 per year, depending on your state, age, and insurer. So for most people earning between $101,000 and $120,000, basic hospital cover costs roughly the same as the surcharge. Above $120,000, insurance is almost always cheaper than the MLS.

What's the cheapest way to avoid the MLS?

The cheapest way to avoid the Medicare Levy Surcharge is to take out a basic hospital-only policy with a $750 excess (the maximum allowed). Look for policies with restricted or basic tier hospital cover. You do not need extras cover (dental, optical, etc.) to be exempt from the MLS — only hospital cover counts. Compare policies on privatehealth.gov.au, the government's official comparison website.

Should I Get Private Health Insurance?

Q: Do I need private health insurance in Australia?

You are not legally required to have private health insurance in Australia. However, if your taxable income exceeds $101,000 (single) or $202,000 (family) for 2025-26, you will pay the Medicare Levy Surcharge (MLS) of 1% to 1.5% unless you hold an eligible private hospital insurance policy. For many people above these thresholds, a basic hospital policy is cheaper than the surcharge.

Find out if private health insurance saves you money. Enter your salary to compare the Medicare Levy Surcharge cost vs the cheapest hospital policies. Most people over $101K are better off with insurance.

Last verified: 1 July 2025

Do I need private health insurance in Australia?

It's not compulsory — but above the Medicare Levy Surcharge (MLS) threshold of $101,000 single / $202,000 family (2025-26), you pay an extra 1% to 1.5% of taxable income unless you hold an eligible private hospital policy. Because basic hospital-only policies start around $900-$1,200/year, most singles above $101k are better off with insurance than paying the surcharge. Extras cover (dental/optical) does not exempt you; only hospital cover does. Source: ATO; privatehealth.gov.au.

Worked examples. Single, $110,000 taxable income, no hospital cover → MLS = 1% × $110,000 = $1,100/yr surcharge. Basic hospital policy ≈ $1,050 → saves ~$50 and gives you cover. Single, $160,000, no hospital cover → MLS = 1.25% × $160,000 = $2,000/yr surcharge → insurance is a clear win. Single, $80,000 → under threshold, no MLS, insurance is purely an elective healthcare decision, not a tax question. LHC loading is separate: delay hospital cover past 1 July after your 31st birthday and pay 2% extra per year you wait.

General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.

Should I Get Private Health Insurance?

Do I need private health insurance in Australia?

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